Earlier this week, Japan’s ruling Liberal Democratic Party (LDP) approved a proposal that would exempt companies that issue cryptocurrencies from taxes on unrealized capital gains for tokens they retain on their books.
According to reports by Bloomberg, citing LDP party member Akihisa Shiozaki, approved a proposal that aims to improve business conditions for companies issuing cryptocurrencies. As it stands, Japanese cryptocurrency issuers are required to pay a set 30% corporate tax rate on their holdings, regardless of if they have realized a profit through the sale or not. The rather harsh tax rates have forced many domestically established crypto and blockchain firms to set up their operations elsewhere over the past few years.
Japan’s Prime Minister Fumio Kishida, who became Prime Minister in September 2021, and his administration is expected to finalize its annual tax policy guidelines before the end of 2022 and the tax code amendments are then usually submitted to parliament in January. Following its submission to parliament in January, the softer crypto tax rules will go into effect for Japan’s next financial year starting on April 1, 2023.
The proposed amendments to the tax code indicate that authorities are pursuing their earlier announced plans to remove some of the red tape on the cryptocurrency industry in an effort to encourage innovation and investment.
Kishida has been a vocal supporter of digital assets and blockchain adoption and recently announced additional investments in the non-fungible token (NFT) and metaverse industry. He emphasizes that NFTs, blockchain, and the metaverse will play an integral part in the nation’s digital transformation giving the digitization of national identity cards as an example of this transformation.
According to reports by Cointelegraph, in October, the Japan Virtual and Crypto Asset Exchange Associated announced plans to relax the very strict screening process for listing new tokens on exchanges. Prime Minister Kishida reportedly called on the self-regulatory organization to do so in June.
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